If you factor in the 10% down payment requirement that is expected on QRM loans, another 12% of borrowers would have to find a non-QRM loan.

Again, if you have to go that route, it’s likely your mortgage rate will be higher and harder to come by.

More than 90% of Mortgage Risk Removed

While it sounds like the government is “going too far,” note that the rules could eliminate more than 90% of serious mortgage delinquencies, leading to a much healthier housing market.

In fact, the DTI rule alone stamps out 36% of all serious delinquencies, while a minimum credit score of 640 would get rid of another 28% of late payments.

Additionally, the 10% down payment requirement would reduce serious delinquencies by 18%.

Those liar loans and 40-year loans would further reduce delinquencies, with an aggregate 92% of risk removed from the mortgage market. Not too shabby.

Loopholes, Loopholes

Of course, there are still some pretty big exemptions to the new rules.

First off, loans approved by the automated underwriting systems of Fannie, Freddie, the FHA, and the VA are exempt from the new rules for a seven-year transition period.

And loans backed by the GSEs and FHA/VA currently enjoy a 90% market share. In other words, a whole lot of nothing might happen over the next many years.

However, if Fannie and Freddie were to come out of conservatorship, the exemption would no longer apply to them.

Additionally, HELOCs are exempt from the QM rules, and loans kept on lender’s books (portfolio lenders) aren’t subject to the QRM rules.

CoreLogic also pointed out that cash buyers aren’t at all affected, which means there will still be plenty of volatility in the housing market.

Couple that with the fact that the mortgage industry is perhaps the most well versed at adapting to new rules, and we could be just years away from repeating the same mistakes seen during the past crisis.